Sun Pharma snaps 4-day losing streak, drops investment plan

NEW DELHI: Snapping a four-day losing streak, shares of Sun Pharma climbed over 4 per cent in Thursday’s trade after the drugmaker informed BSE that its subsidiaries have dropped a plan to invest in a wind energy project in the US.

Subsequent to further evaluation, these subsidiaries have decided not to proceed with this project, the company said in a regulatory filing to BSE. Following the development, the stock surged 4.5 per cent to hit a high of Rs 739.40.

The scrip had hit a 52-week low of Rs 706.40 on Tuesday. The domestic equity market was closed on Wednesday on account of Gurunanak Jayanti. Asia-focused brokerage CLSA said cancelling the wind energy foray is a positive development for Sun Pharma. The move will allay the capital allocation fears of investors.

The brokerage said it likes Sun Pharma's business model and earnings growth prospects. Timely launch of gGleevec in the US due in February 2016 will be a key catalyst for the stock, it said, adding that the stock trades at a compelling valuation of 20 times FY17 EPS in line with its 10-year average PE.